Mortgage interest relief will be phased out over next three years

Budget move to close scheme will increase cost of 300,000 loans

People who bought between January 1st 2004 and the end of 2012 will get at least some relief on their mortgage payments until 2020. File photograph: Rui Vieira/PA Wire

The decision to abolish mortgage interest relief will lead to almost 300,000 mortgage holders paying more for their home loans.

However, by tapering the relief out rather than scrapping it immediately, the blow will be cushioned for most of those affected.

The scheme was initially scheduled to expire at the end of 2017 but in his first budget as Minister for Finance Paschal Donohoe announced on Tuesday that he would extend it on a sliding scale which means people who bought between January 1st 2004 and the end of 2012 will get at least some relief on their mortgage payments until 2020.

A reduced rate of 75 per cent will apply next year, falling to 25 per cent in 2019, 50 per cent in 2019 and 25 per cent in 2020.